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Archive for January, 2008

As much anticipated keynotes for CES, Microsoft CEO Bill Gates and Yahoo CEO Jerry Yang had a lot of pressure to deliver a cool new technology CES regulars have come to expect. While attendees lined up four hours early for Gates’ speech and only trickled in 30 minutes before Yang’s, Yahoo was the clear-cut winner in terms of delivering on a wow factor. It’s a small step for Yahoo, which has the likes of Google to compete with. Rumors that Microsoft itself may be plotting to acquire the Internet company still quietly circulate as well.

Gates’ demo, concluding his speech, was essentially a GPS handheld-looking device – not a cell phone or gaming console by any means – more so a large block. The apparatus will be used to identify people and places and bring up background information, menus, directions, histories, advertisements, etc. To illustrate, Gates used a photo of himself to access pictures and clips from his last eight CES keynotes.

Although Microsoft’s technology was cool as usual, Yahoo’s Yang outdid Gates by debuting a concept demo for a mailbox homepage that took the recognition capabilities of Microsoft’s block to the Web. Yang plans to morph Yahoo mail into a universal mailbox that includes emails, voicemails, instant messages and messages from any third-party network a user is in, such as LinkedIn or MySpace. The mail service will allow users to simplify their mailboxes by creating a hierarchy of importance amongst the user’s contacts, as well as show updates that any contact may provide to Yahoo.

Yang, along with Marco Boerries, Yahoo’s senior vice president of Connected Life, also demonstrated other third-party applications that could be built into Yahoo’s navigation bar including evite.com, MTV or Flickr – sites users may frequent or ones their friends and connections recommend they use. Those in the Flickr community can create a tag map – a collective showcase of what the world finds interesting, as Yang described it. From the Yahoo mail page, subscribers can see a location a Flickr user has recommended, along with pictures and more information that they choose to upload.

In an equally intriguing example, Yang used the interface to go from an email regarding dinner plans out to profiles of those emailed, their dinner preferences and availability. Through evite, the party planner can narrow down a restaurant from a list of recommended ones that match the participants’ tastes, view the menu, get directions and send an invite to everyone’s mobile, PC or TV – all with a few drags of the mouse.

Granted, it’s a lot more impressive to be shown rather than told, but essentially, any information users choose to share with Yahoo can be turned into a personalized, potentially very useful collaborative experience. The site really combines the coolest aspects of social networking and content sharing and has the potential to make Google take notice. Naturally, neither Gates nor Yang would commit to a launch date, but it will be interesting to follow the companies as the technologies come to fruition.

“Buy on the rumor, sell on the news.” So goes the old Wall Street saying, and so go investors, in large numbers. One of the problems with that notion, of course, is that it encourages rumors in all sorts of unhelpful ways. Take for example the story of Carrier Access, an equipment vendor that put itself up for sale last summer and was acquired by another vendor, Turin Networks, in December.

In early August, just days after Carrier Access announced it was seeking strategic alternatives, a news story in one prominent online publication, citing anonymous sources, claimed Tellabs was “close to acquiring” Carrier Access for nearly $7 per share, having been in discussions on the subject “for a while.” According to information filed only recently by Carrier Access, the company had had discussions with numerous potential suitors in the months during which it was seeking strategic alternatives, but in all that time, it had received (or in one case, sent) non-binding “indications of interest” from only four companies: Turin Networks, a private equity fund, a small-cap public company and a company that is publicly traded outside the United States. None of those sound like Tellabs to me. With a market cap above $2.6 billion, it’s a bit of a stretch to call Tellabs “small cap,” since the term usually refers to companies with market caps between $250 million and $2 billion. But even if it was, the small-cap company in question didn’t send Carrier Access a letter of interest until November 15, 2007. And even in mid-November, Carrier Access said, the small-cap company had not yet begun due diligence on its would-be target.

So how could Tellabs have been “close to acquiring” Carrier Access back in early August? I’m not sure.

At the end of September, the same online publication wrote again of the supposedly imminent Tellabs deal, claiming, “One source says the board was set to vote on a number of proposals [this week], with Tellabs being the front-runner.” The board did meet that week to discuss potential deals, but again, at that point, Carrier Access hadn’t received a formal offer (even a non-binding one) from any company matching Tellabs’ description, so being “the front-runner” seems doubtful, to say the least. According to Carrier Access, the board decided at that meeting to send its own letter of interest to the non-U.S. publicly held bidder, to express an interest in acquiring it in an all-stock transaction, while continuing discussions with the other three parties. (According to the filing, that non-U.S. firm wanted to execute a reverse-merger, in which Carrier Access would technically acquire it but end up owning the minority of the combined company, so that the resulting company would trade on the NASDAQ.) Carrier Access sent that letter on October 1, 2007 and spoke with management at the non-U.S. company shortly thereafter, continuing discussions with the other bidders.

Meanwhile, the vendor’s joint product partnership with Tellabs–perhaps the main justification for a Tellabs acquisition–had dissolved.

In early November, the aforementioned online publication claimed Carrier Access was getting acquisition offers “in the $5 to $6 range,” again citing anonymous sources. That would be interesting if true, since the company agreed to be acquired for $2.75 per share later that month.

I’ll leave it to others to speculate as to the motives of those anonymous sources or how their assertions came to be reported as truth. I’ll simply say: Don’t believe everything you read. And don’t buy on the rumor.

LAS VEGAS – Yep, after delivering the keynote address at the Consumer Electronics Show eight times since 1994, Microsoft chairman Bill Gates is giving up his annual role as technology seer for a life focused on his charitable foundation. If you hadn’t heard, Bill Gates is retiring from Microsoft, and he’s going out with a little humor. At CES he spoofed his rather eccentric and geeky personality with a video in which he called everyone from Bono to Hillary Clinton looking for some activity to occupy his time (to see the keynote Webcast see Microsoft’s Press Pass page).

Starting next year, we’ll have to listen to someone else’s vision of technology at CES. Maybe it’s blasphemous to say, but I think it’s for the best. Gates and Microsoft haven’t exactly been on the cutting edge of innovation of late. The company sells an awful lot of software, but the average person on the street stopped getting excited about the newest release of Windows in about 1995.

Frankly the most spectacular jumps in consumer electronics in recent years have not come from Microsoft. Apple gave us the portable digital music player. Microsoft gave us the Xbox, but only after Sony and Nintendo turned the game console into a massive global market. And in a technology closer to home, Microsoft’s probing into the mobile space has been mediocre at best–Palm invented the smartphone, while RIM and Apple perfected it for the enterprise and the consumer, respectively.

Sound like I’m Microsoft bashing? Perhaps I am a bit. But I’m not criticizing the company or its business model. It makes great products (well, some are greater than others) that people buy by the boatload. But it’s been quite some time since Microsoft came up with the next big thing. Just look at what Gates and Microsoft cohorts preached from the CES pulpit: social media, home networking, even video sharing. It looks neato, but it’s hardly a new gospel. We’ve been seeing the same stuff presented at conferences for years.

Maybe that’s the value of Gates’ keynotes. Just as Microsoft’s software might allow it to turn a cutting-edge innovation into a mass-market phenomenom, maybe Gates’ keynotes validate those innovations to the industry at large. If you saw Bill talk it up at CES, then you know the technology has legs. But maybe it’s time the keynote was delivered by a true visionary in the technology world instead of the industry’s most successful reactionary.

Keep tuned to Unfiltered this week. Associate Editor Sarah Reedy and I will be making daily updates to the blog.

The Netflix-LG announcement today is just one more sign of what’s coming in the video competition wars. As we head into CES, we can expect a lot more news of this type. Netflix is planning to stream movies directly into LG High-Definition television sets, bypassing any existing service providers with its video content, which includes thousands of movies and TV titles.

While telcos are moving as fast as they can — note the qualification there — to deliver video services, the current sellers of video content are going to stand still and watch their market disappear. Just as AT&T will try to exploit IPTV to make its U-verse service all-encompassing, consumer electronics makers and content distributors will capitalize on the ubiquity of the Internet to extend their reach as well.

The result is likely to be a much more fragmented video entertainment market than already exists today. Cable companies and telephone companies won’t be able to take for granted the appeal of their video-on-demand services, and they are going to have to work harder to sell all the extras and add-ons that many of them are developing now.

Services like the ones Netflix and LG are promising to offer will have greater appeal to a younger audience that glommed onto Netflix first and is already doing much of its video viewing over the Internet. Telcos and cablecos will have to work harder to convince the members of this crowd that they want to pay a major monthly fee and sign two-year contracts for services.